Credit Card Debt and Bankruptcy

Credit card balances can become difficult to manage when high interest rates, late fees, reduced income, or unexpected expenses make it hard to keep up with monthly payments. If credit card debt has become overwhelming, bankruptcy may provide a legal option for addressing qualifying balances.

A bankruptcy attorney in Chicago can help you understand how credit card debt is treated under Chapter 7 and Chapter 13 bankruptcy and whether filing may be appropriate for your financial circumstances.

Can Credit Card Debt Be Discharged in Bankruptcy?

Credit card debt is generally considered unsecured debt. In many cases, qualifying credit card balances may be discharged through Chapter 7 bankruptcy, meaning the individual is no longer legally responsible for paying those discharged debts.

There are exceptions, including certain debts involving fraud or other circumstances that can affect dischargeability.

Credit Card Debt in Chapter 13

Under Chapter 13 bankruptcy, eligible credit card balances may be included in a court-approved repayment plan along with other debts.

The amount paid toward unsecured debt depends on factors such as income, expenses, assets, and the requirements of the repayment plan. Some qualifying balances may be discharged after successful completion of the plan.

When to Consider Your Bankruptcy Options

It may be worth learning more about bankruptcy if you are experiencing:

  • High credit card balances
  • Difficulty making minimum payments
  • Multiple collection accounts
  • Collection calls or letters
  • Creditor lawsuits
  • Wage garnishment
  • Credit cards being used to cover basic living expenses

Bankruptcy is not the right solution for everyone. Your income, property, debts, and long-term financial goals should be considered before deciding how to proceed.

Explore Your Credit Card Debt Options

If credit card debt has become difficult to manage, understanding your bankruptcy options can help you determine your next step. Consider speaking with a Chicago bankruptcy attorney to learn how Chapter 7 or Chapter 13 may apply to your credit card debt and overall financial situation.